tv Nightly Business Report PBS January 1, 2015 1:00am-1:31am PST
report" with tyler mathisen and susie gharib. funded in part by -- thestreet.com and action alerts plus where jim cramer and fellow portfolio manager stephanie link share their investment strategies, stock picks and market insights. you can learn more at thestreet.com/nbr. strong year for stocks. investors close the books on 2014 with another year of gains. despite today's triple digit decline for the dow jones industrial average. january effect. are stocks a good buy at the start of the new year? we have the names that have historically done well when the calendar changes. and pay raise. while millions of workers ring in 2015 with a little more money in their pockets. we have all that and more
tonight on "nightly business report" for this last day of 2014 wednesday, december 31st. good evening, everyone. on this new year's eve. i'm susie gharib. >> i'm bill griffeth in tonight for tyler mathisen. once again, no champagne rally on wall street today. all the major averages sold off on the last trading day of the year but it was another banner year for stocks. the blue chip index managed to record its sixth consecutive year of gains despite falling in today's final session of the year. the dow jones industrial average tacked on 38 record closes this year. the s&p 500 posted 54 new highs. help improving economy and accommodative federal reserve. last day of 2014 here's how the major averages close. dow falling 160 points. nasdaq down 41 and s&p falling 21 points. >> here's the good news why investors are celebrating today. the yearly performance of the
major stock market averages were amazing. blue chip rose 7.5%. nasdaq up 13% and s&p gained 11%. its third straight year of gains. as for many predicted yields rise this year but the ten year yield finished at 2.17%. that's the biggest yearly drop since 2011. while utilities and health care were the top performing sectors, the best performing stock was southwest, up almost 125%. the global market that outperformed all others is an unlikely one. argentina, up almost 60% and that's despite battling a debt default and currency crisis. >> of course you cannot talk about 2014 without discussing the biggest surprise of the year. energy. which was the worst performing sector. crude oil saw biggest annual decline since 2008 under 46% and
further pressure today with weak data out of china ending year at $53.20 a barrel. the trend is the same for brent crude which finished at $57.23 down 43.38 for the year. jackie deangelis looks at sentiment in the market for 2015 and the possible wild card that's emerging in that sector. >> reporter: crude oil took a wild ride in 2014 down nearly 50% on the year a plunge no one saw coming. >> it took me a little bit by surprise but once we broke key levels on monthly charts. you saw that room down below and knowing what happened in the past you did see it coming after it broke those levels. >> reporter: the reason? u.s. shale production boomed with domestic oil production with 9 million barrels a day closing in on saudi arabia the world's largest oil exporter. but the demand wasn't there. weakness in china, japan, and
the euro zone took a surprise with the backdrop of rising supply the market got crushed. so what does the future hold for crude prices? if opec stands firm and cr production u.s. shale producers have to. the question is how low do we go before that happens? >> i think first half of the year is much the same. maybe not as much of a violent selloff as you've seen in the past but it's still looks very bearish and i don't see there being any cuts by the opec members and why they change their tune now. >> reporter: good news falling energy prices helps consumers. the national average for a gallon of gas, $2.26 according to aaa, down $1.06 from this time last year. many prices seeing gas prices under $2 and oklahoma and missouri seeing state averages under that level. total savings? $14 billion this year. what are the wild cards that could impact pricing next year
aside from supply demand dynamics? well geopolitical strikes is one. a changing of the guard in saudi arabia as the king is facing health issues is another. and then of course there's the rise in dollar. for "nightly business report," i'm jackie deangelis. well within energy the worst performing stock this year were oil and gas producers and drillers. take a look at these numbers. transocean lost 63%. denver resources fell 50%. noble and ann scope both off about 48% and range resources dropped 36%. now to the biggest loser in the dow jones industrial average in 2014. that would be ibm. big blue battered and bruised this year losing 15% of its value. what plagued the company and where does that stock head from here? josh lipton has our story tonight. >> as the year closes hardware will be less than 10%. >> reporter: ibm's ceo said ibm
has to reinvent itself as it has in the past but will investors wait around to see if this transformation actually works? ibm shares dropped hard this year. in fact ibm was the worst performer in the dow. one knot on big blue is the company initially missed just how disruptive cloud technology would be to its traditional businesses. >> you have the small cloud players that don't have and don't need a lot of infrastructure and can offer a solution that can cost a whole lot less and come in more quickly. i think ibm not to say was blind sided but really caught off guard. >> reporter: now changing course at ibm but drawing the cloud business organically as well as by making acquisitions. ibm expects to generate at least $7 billion in cloud revenue by 2015. ibm bowls points to other reason for optimistism as well.
they say the stock isn't investive and a 20 year low, a possible contrarian indicator. ibm is an iconic global brand that has reinvented itself in the past. the question now is whether they can execute another transformation of big blue. if not, she risks another disappointing year for her shareholders. for "nightly business re josh lipton in silicon valley. >> every year this time investors ask a common question: are stocks a good buy in january? it's the so-called january effect that says stocks go up the beginning of the year because investors want to start buying again. so which names tend to do well? morgan brennan digs through the data. >> reporter: forget those new year's resolutions to quit smoking or eat healthier. how about one for your investment portfolio? a stock detox. over the past decade, certain names have tended to pop in the first weeks of a calendar year.
according to data for market anl analytics firm. sciences 3 cents a piece. 2014 was good to the health care industry and analysts expect that to continue in 2015. >> next year i think it's going to continue to be about m&a. three closings in the first quarter, that will really now change it to the hopes of what could happen with mna from putting numbers down in the record and really executing on a lot of the plans on the integration side and really start to see the benefits of these mergers come together. >> reporter: medical device makers may be worth a look but think twice about certain retailers. according to past performance, at least, game stop l brand and kohl's brands slumped in january, thanks in part to holiday sales data. telecom companies tend to fare poorly at the beginning of a
year. centurylink tumbled on avrng 10% the last data and at&t and frontier usually fall 3% as well. keep in mind how stocks fare in january doesn't always serve as a good indicator for the rest of the year. contrary to the so-called january barometer theory. this year the s&p 500 slid lower in the first month. but it's ending 201412% higher. for "nightly business report," i'm morgan brennan wishing everyone a happy new year from the nasdaq in new york city. there are big three themes investors need to keep in mind for the new year. dominic chu has that part of the story. >> reporter: stock market did rally in 2014 but not as much as it did the year before. investors are dealing with a host of uncertainties as we head into the new year. one of the biggest concerns comes by at the energy sector falling oil prices helped consumers save lots of money at the pump. but reduced spending by oil companies themselves is a big
risk. >> it's not all positive. there's certainly going to be an earnings and different impacts on the market that are not quite so positive for 2015 from the oil and gas business. >> reporter: and then there's uncertainty about if and when the federal reserve moves to change interest rate policy. low rates have arguably been fueling much of the recovery in the stock market and broader economy. that uncertainty has some money managers on edge. >> we don't know when the federal will raise rates. it's hard to see interest rates going any lower, but the exact timing of that can be very difficult and when it does occur, it can occur relatively quickly. >> reporter: and of course we operate in a global economy. for issues outside the u.s. have repercussions within our borders. >> there's always the potential of something with russia or tensions increasing with china or something like that impacting the global economy. but i would say it's always the
things that you are least worried about that actually could be the biggest risk from a geopolitical standpoint. >> reporter: it's due to risks like these that leave some experts to exercise caution and patience when it comes to investing in the new year. >> just because your friends made a lot of 20% in the stock market the last couple of years doesn't mean you have to go all in. sit in the boat wait for a year and then that's your best entry point skblr after six straight years of gains, many investors pay closer attention to the unknowns in the market and coming to grips with just how much appetite per risk they have. for "nightly business report," i'm dominic chu. let's turn now to patricia edwards and get her outlook of the year. she's managing director for u.s. bank wealth management. happy new year patty, nice to have you with us. >> happy new year, susie. good to be here. >> are you changing your investment strategy? >> you know, we're not changing our investment strategy at all right now.
what we're looking for in 2015 is an s&p target of 2240 a little over 10% from here. adding dividends. looking about a 12% year. >> for the last i don't know how many years, patty, there's been the forecast that the bull market in bonds was over. that interest rates were going to rise and it hasn't happened yet. will it happen in 2015, especially if the fed starts to raise rates? >> so the fed has been easing off. we know that we had a taper tantrum. we expect it will maybe have a taper tantrum part two in 2015 when they actually do start to rise but we believe they are going to start raise rates in the june time frame, maybe a little bit later than that. of course it's all dependent on what janet yellin tells us. >> the mortgage rates out there, what do you think will happen? >> well we're looking for the ten year to get up to 3% by tend of the year. data dependent, it could be 27
2.75 or 3%. we see tinhe inflation under control and we think there could be capital expenditure. >> one of the resolutions is to put some of the savings and money in the market for january. what advice can you give where are good places to put your money in the new year and then come out okay by next year at this time? >> all right. so our themes we're looking for capital expenditure. that would lead us towards the industrials. you know that the consumer has got more money in their pocket. that would lead us towards consumer discretionary. we believe interest rates are going up. that would lead us towards the financial sector. and then look at the energy sector. you want to be really careful here but we think that the baby has been thrown out with the bath water on a lot of these names and you can very selectively look at these names also. >> a lot of our audience will be
income oriented and, in fact one of the big income-oriented centers, the utility stocks were the best performing sectoin in 2014. which is kind of a surprise actually. do you expect that to happen and where would you invest for income right now? a couple a. >> a couple of things. we look for dividend growths rather than high dividend yields. we think the companies growing the dividends on a sustainable basis are probably a better place to go. look at somebody who's been raising the rates, their dividend rates for sustainable period of time. beyond that you might also look at the rates. they are actually becoming their own sector probably in march of 2015. and with that you've got indexes that are going to get goo into that space. >> thank you. patricia edwards at u.s. bank
wealth management. more people applied for jobless benefits. claims rose by 17,000 to 298,000, more than expected but before the average was virtually unchanged. the housing market remained sluggish. the national association of realtors said pending homes, contracts actually signed to buy previously owned homes, moved moderately in the month of november by .8% and signed contracts rose 4% despite continuing low mortgage rates. freddie mac said the 13 year loan rate is 18.3% this year slightly higher this week but low for 2015. still ahead, why our market monitor guest tonight said financials and technology are the places to invest in 2015 but first, a look at stocks that doubled this year.
2014 has not been kind to penn coast flag ship total return funds. preliminary data from morning star showed the world's largest bond fund trailed most of its peers after a difficult year for penn koe. the fund rose 4.3% behind 77% of peers but the gain was a refund from the fund's loss in 2014. you remember the two managers mohammed alarian and bill gross left this year prompting a weigh of outflows from nervous investors. some of the lowest paid workers in our country will have a little something to celebrate
as 2015 begins. kate rogers has the details. >> reporter: across the country, many workers will be ringing in the new year with a raise. beginning on january 1st ten states will see increases to their minimum wage rates, thanks in part to ballot measures passed in midterm elections. another nine get hikes due to annual cost of living increases. new york's race kicks in today and alaska's minimum wage increase today will kick in february 24th. the current federal minimum wage is at $7.25 an hour but the national average minimum wage after these hikes kick in will be around $7.75 an hour with higher wages, coming more pressure on not just small businesses but franchisees. 18 million employees nationwide working for franchising according to the international franchise association.
said more than 85% of their members believe recent efforts by some cities and states to increase the minimum wage will negatively impact their business. franchisees may be tied to big corporate names like mcdonald's and subway but often, operate as smaller store fronts owned by individuals. fast food franchises in particular have been caught in the cross hairs of the national minimum wage debate as workers nationwide have been striking for $15 an hour. critics say minimum wage hikes will lead to job cuts and higher costs for consumer. but christian weller from the center of american progress said franchisees can actually benefit. >> i think they need to take a deep breath in many ways, it will have a positive effect for many franchisees because higher minimum wages for their customers and across the country and many states also mean more buying power for many customers. i think there's a direct positive effect to offset
negative cost increases. >> reporter: the minimum wage debate will likely pick up where it left off once the congress reconvenes in january. for "nightly business report," i'm kate rogers. we begin tonight's market focus with amazon and an unlig losing strike. the online retailer lost more than a fifth of its value this year, down 3% so far this quarter. what's even worse is that it's the fourth consecutive quarterly drop for the stock which is the first time that that's ever happened. shares today closed at $310.35 adding just 5 cents. if your new year's celebration involves takeout or delivery this is for you. shares of online ordering service, grub hub, upgraded the stock to outperform and also put $43 price target on the stock and said the company could become a possible acquisition target. shares rose more than 1% $36.32. bad news for apple the end of the year.
ipad sales for 2014 expected to decline in the first year in the tablet's five year history according to a new report. sales forecasted to be 68 million in 2014 6 million less than sold in 2013. shares of apple off about 2% to $110.38. our market monitor tonight light technology and financials heading into the new year. the overall themes for 2015 will be the return of growth stocks. steven dewdash, president and financial advisor at wealth management. >> happy new year. >> the two best performing sectors in 2014 were defensive issues. utilities and health care. but you see a return of growth in 2015. why? >> yeah. i mean we're definitely bullish on both the tech sector as well as the financial sector but growth stocks has been fascinating the last few months. the last few years, investors have been desperate for any
dividend with yield essentially being at zero. if interest rates do increase which a lot of people feel will happen this year this desperation likely goes away and renewed interest in companies that are taking the extra earnings putting it back into the firm trying to hit the bottom line and trying to get outpace returns. >> steven you have among the financials you're recommending is wells fargo. why you like it trading at $55 a share. >> we like financials as a whole. bank of america problem that's been going on is well documented. the cultural issues with meryl lynch, the retention bonuses falling off. we feel that wells fargo is the best position to pick up market share in the next 12 to 18 months when the exodus takes place. they're the only major player out there with the traditional brokerage size as well as the independent channel with a unique advantage over peers.
we think they'll outpace predictions and be in a sector that outpace the market as well. >> you have j.p. morgan chase this year. a lot of legal issues facing them. jay mee diamond's health. what do you see happening in 2015? >> tough couple years with them. but, you know, in the financial sector though as a whole, as the economy continues to pick up if interest rates do rise which likely second or third quarter of the year start taking place. you're going to start seeing a new flow of refinancing and purchases as borrowers come to the realization as the extremely low interest rate market we've been in the last six or seven years is starting to come to an end. on top of the fact we're not toughest regulatory market we've ever seen. the new political climate, it's likely that's going to eat up a little bit. we feel the stock is at a discount right now and likely if you pick it up can pick up a few extra points as well as outperforming the overall market. >> you have one tech stock you
recommend called cdw traded on the nasdaq. this firm, why do you like it? >> it's a smaller, just came out in the market at 12 or 14 months. and '08, businesses when the recession hit stock spending on tack and the recession took not a very long time but the recovery just seemed like it never took place. just the last 12 months you start to see businesses spend the cashes they've been hoarding, pufting it back into technology as well as other sectors. we think that sector as a whole is continuing going into 2015 and cdw is in an excellent position to outpace their peers to outpace the overall market. >> steven dewdash with it wealth management. happy new year. >> thank you, have a nice day. coming up next an economic indicator to help usher in the new year. stay tuned.
here's a new year's eve economic indicator. a lot of people don't want to spend on champagne and the opposite is true when the economy gets stronger. this year according to champagne distributors sales growth up 7% year over year more than double the growth of the entire wine category. according to this americans are feeling better about spending and their finances. that's a good way to end the year. >> i agree. it's not quite the way we want to end the year. father time is here. >> oh. >> bubbly. oh you clean up pretty good matteson. congratulations. >> thank you so much happy new
year to you. what a nice surprise. glad you're here. >> the last broadcast, the last rodeo. happy new year to both of you there. >> thank you so much. >> and to all of you, hope you keep watching. >> to new opportunities. >> thank you so much. and that is "nightly business report" for this new year's eve. i'm susie gharib. thank you for watching and be sure to tune in tomorrow for our special 2015 outlook, holiday edition of nbr. >> i'm bill griffeth. happy new year everybody. >> happy new year everyone. >> we want to take you look around the globe as the world rings in the new year. from all of us here at "nightly business report," have a good 2014 and see you next year. ♪